Claim No: DWT/0038/2011
In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai
IN THE SPECIAL TRIBUNAL TO DECIDE THE DISPUTES RELATED TO THE SETTLEMENT OF THE FINANCIAL POSITION OF DUBAI WORLD AND ITS SUBSIDIARIES
GREENFIELD TRADING COMPANY FZC
1. On 8 January 2014 (re-issued on 9 January 2014) the Tribunal held that Greenfield Trading Company FZC (“Greenfield”) is entitled to judgment against Nakheel PJSC (“Nakheel”) in the sum of AED 35 million “together with interest to be assessed” (Judgment para.80).
2. The parties were unable to agree how the interest element of the Judgment should be assessed, and on 13 May 2015 the Deputy Registrar, Amna al Owais, gave Directions for resolving that dispute.
3. Pursuant to the Directions, Greenfield served its Submission on 21 May 2015, Nakheel responded thereto on 11 June 2015 and Greenfield served its Reply Submission on 25 June 2015.
4. The submissions covered both “pre-judgment interest” and “post-judgment interest” and it is important to note that as a matter of law these are essentially different concepts. The former is concerned with calculating a figure for interest which will be included in the amount for which judgment is given. The second means establishing a rate which will apply to the judgment figure from the date of the judgment until the amount due under it is paid in full.
5. With regard to pre-judgment interest, a further distinction must be noted. When judgment is given for fixed sum which the defendant ought to have paid on some prior date, before legal proceedings were begun, it would be insufficient to give judgment, at some later date, for that amount alone, because the claimant would receive no compensation for being out of pocket during the intervening period. Rules of Court therefore give the Court power to include interest in the amount for which judgment is given, even though, on a strict view, the claim is for payment of the principal sum alone, pursuant to a contractual or other legal right to be paid that amount. Such provisions are found in UAE law, for example in Article 76 of the Law of Commercial Procedure, Federal Law No.18 (1993) and there is some dispute in the present case as to whether or not those provisions apply.
6. The present case is not of that kind. Here the claim was not made under a contract or asserting any other legal right to be paid an amount that became due to the Claimant on some earlier date. The Claimant was awarded compensation for harm done to him for which the Defendant was responsible. In common law terms, it was a claim in tort, not for breach of contract. The Claimant relied on certain statements of fact that were made to him by employees of the Defendant, which were incorrect and negligently made. He paid a deposit totaling AED 35 million to a third party vendor of property in Dubai, on 12 May 2008, which he was unable to recover. The Tribunal held that he was entitled to be compensated for the loss of AED 35 million and also for interest on that amount during the period he was out of pocket. The interest element formed part of the amount for which judgment was given. There is no need, therefore, for the Claimant to rely upon any legislative provision which permits him to include interest in the judgment amount. The judgment itself includes interest to be assessed by the Court, unless it can be agreed.
7. This second distinction, however, is of no practical importance in the present case. Interest at a current market rate, meaning the rate charged commercially for loans at the relevant times, is a proper measure of compensation for being out of pocket after the payment was made and up to the date of the judgment. That is the basis on which pre-judgment interest has been assessed in cases where a statutory right to recover such interest has been recognized. Therefore, those cases are relevant when assessing the appropriate interest rate to be applied in the present case.
8.That also means, however, that a statutory fixed rate is not relevant to the present enquiry, unless it was established as the market rate at the relevant time. In any event, there has to be evidence of what the market rate was.
9. Against that background it is necessary to decide, with regard to pre-judgment interest, first, the date from which the interest is to be calculated, until the date of the judgment (9 January 2014); and secondly, the appropriate rate(s) that are to be applied.
Pre-Judgment interest – commencement date.
10. Claimants have suggested, first, the date of execution of the MOU with the third party vendor under which the deposit of AED 35 million was paid; secondly, the date when that sum was paid; thirdly, the date of the first request for the sum to be repaid; and fourthly, the date when the DWT proceedings were filed.
11. The Defendants contend, first, that no pre-judgment interest should be awarded, because there is no statutory right to interest on an unquantified claim; and secondly, that it should only be awarded from the date that the claim was filed (11 July 2011).
12. For reasons of principle, as stated above, we hold that the Claimant is entitled to be compensated for the harm suffered by being out of pocket after the payment was made to the third party vendor until the date of the judgment. The relevant period, therefore, for pre-judgment interest is from 12 May 2008 until the date of the judgment (yet to be given).
Pre-Judgment interest – rate
13. Claimants submit that the rate should be 12% per annum because that is the rate specified in the Defendants’ standard forms of contract to be paid by purchasers of property when payments to them are delayed, including the original SPA for the sale of the relevant plot by the Defendants to the original purchaser. Claimants also rely on statutory provisions which specify a commercial rate of interest (Articles 76, 77, 88 and 90 of the Commercial Procedures Law) which the Court of Cassation has held means “calculated as per current market value at the time of dealing” and awarded 9% per annum (Case No. 2004/38). Article 76 of the Commercial Code provides that 12% per annum may be awarded if it is the market rate, but it is the maximum figure (“provided that it does not exceed 12%”).
14. The Defendants submit (paragraph 29 of their Response) that the appropriate rate, if pre-judgment interest is awarded, is the EIBOR 3 months’ rate plus 1%. That is the rate specified for post-judgment interest under DIFC Law No. 10 of 2004 (Article 39) and the DIFC Courts Rules (Rule 45.19; compare RDWT 36.30) by the DIFC Courts Practice Direction No. 1 of 2009 (as clarified), but the Practice Direction continues “or such other rate as the judge may prescribe in the judgment”.
15. The Defendants submit that the same rate (EIBOR 3 months’ rate plus 1%) applies to the post-judgment period also (Submissions paragraph 19). It is convenient, therefore, to consider that issue, regarding the post-judgment period, at this stage.
Post-judgment interest – rate
16. The Claimants contend that the post-judgment rate should be 12% per annum because that is the rate specified in their own SPA contracts with purchasers from them; alternatively, 9% per annum because that has been adopted by the Court of Cassation in cases where it sought to award interest “calculated as per current market value at the time of dealing” (Case No.2004/38 (above)); and in the further alternative the EIBOR 3-month rate plus more than 1% in line with the Tribunal’s Ruling in CDG (Construction Delivery Group) FZE v. Nakheel PJSC Claim no: DWT 0008/2010 and others dated 22 December 2014 where the rate of 4% per annum was awarded that being between 3 and 4% higher than the EIBOR figure (Ruling para.16).
17. The Defendants contend, as stated above, that post-Judgment interest should accrue at the EIBOR 3 month rate plus 1% (Submissions para.30).
18. The Defendants helpfully have provided evidence that the EIBOR 3 month rate in April 2011 was marginally greater than 2% (range 1.98875% to 2.13125%) and in January 2014 it was 0.81286% (uniform throughout the month). In CDG v. Nakheel (above) the Tribunal awarded 4% because that was between 3% and 4% greater than the EIBOR 3 month rate at the dates of the relevant judgments (18 September 2013 – 0.85714% and 3 April 2014 – 0.78857%).
19. The Ruling in CDG v. Nakheel also reveals that on 19 August 2010 the rate was 2.3375% and on 13 December 2010 2.14375% (Ruling para.13). Those figures justified the Tribunal’s references in previous Rulings to a 6% figure, that being 3 to 4% higher than the prevailing EIBOR figure (see Shokat Mohammed Dalal v. The World LLC and Nakheel PJSC and the CDG (Construction Delivery Group) FZE v. Nakheel PJSC & Others Claim No. DWT/0008/2010 Ruling para.13).
20. The Tribunal can take judicial notice of the fact that EIBOR rates have declined over the period since 2008. Although there is no direct evidence of the rates in 2008 – 2010, the Tribunal infers that they were not less than the August 2010 figure of 2.3375% (para.19 above).
Conclusion – market rates
21. In CDG v. Nakheel PJSC (above) the Tribunal observed –
“In principle, when interest is awarded it is calculated at the lending rate, in other words, the rate which the judgment debtor would be required to pay to a lender of the money” (Ruling para. 14).
- In the present case the Tribunal is concerned to establish a relevant market rate both for the pre-judgment period from 12 May 2008 until judgment is entered (no part of the judgment has been paid) and post judgment until such time as payment is made.
- The Tribunal holds, first, that the amount for which judgment is entered shall include interest calculated as simple interest on the sum of AED 35 million at the rate of 6 (six) per cent per annum from 12 May 2008 until 12 May 2012 and at the rate of 4 (four) per cent per annum from 13 May 2012 until the date of the judgment.
- Secondly, the Tribunal holds that the Defendant shall pay post-judgment interest at the EIBOR 3 month rate plus 3.2% per annum calculated as simple interest on the judgment amount until the date of payment.
Costs of this application
- The Defendants shall pay the Claimants their costs of this application to be assessed if not agreed.
Sir Anthony Evans
Date of Issue: 14 October 2015
Date of Re-Issue: 26 November 2015